Small business owners are a vitally important part of our nation's economy. They are the heart and soul of cities of all sizes across the country providing jobs, community support, and a way of life for many. That being said, small businesses also must compete against their larger corporate counterparts for things like market share and employees. For that reason, small business owners need to seriously consider their employee benefits plans, not looking at them as if they are an expense they can’t afford...but rather an investment that they can, and should offer.
During the last year, small business owners have been the hardest hit and are struggling to get back on their feet. Part of that process of recovery is the important task of hiring staff. Small business owners struggle to offer the benefits needed to attract employees and can’t compete with corporations that can pay top dollar for the best recruits. The good news, however, is that offering employee benefits is an extremely beneficial investment that will pay dividends in the long run. Here’s why:
1. Tax Reasons for the Business
Certain benefits offer tax benefits to the business for participation, and may also save you on employment tax. Many types of employee benefits are viewed as tax-free compensation and are exempt from Social Security and Medica (FICA) tax. FICA-free benefits include health insurance and employer contributions to retirement plans. Other benefits that fit the bill for FICA-exempt status include things like cell phones, fringe benefits like coffee in the break room, educational assistance, HSA (Health Savings Accounts), group term life insurance, meals, and lodging, to name a few.
2. Employee Recruitment
Benefits, even informal benefits like a flexible work schedule, can give you an edge and help you compete for quality employees. Employees are looking for perks beyond just a paycheck, and having a list will help sway a good candidate in your direction when they are trying to decide between competing job offers.
3. Employee Loyalty and Job Satisfaction
Current employees look for a rewarding work environment. They want to know that there is more for them, at the end of the day than just a paycheck. Asking your employees what you can offer will help them feel a strong sense of loyalty to the company and that their work is contributing to their personal goals, not just the company’s goals.
4. Positive Company Culture
That sense of loyalty and job satisfaction bleeds over into company culture. When employees are optimistic and motivated because their job is an extension of their personal goals through the benefits provided, it affects the way they interact with each other and with customers. They tend to develop a sense of pride in their work.
5. Pre-Tax Benefit for Employees
There are also financial benefits for employees for taking advantage of benefits that provide pre-tax exemptions. Benefits such as an HSA or IRA allow employees to set aside funds pre-tax, and be able to tap into those funds when they are needed either for healthcare or for savings.
6. Employee Productivity
It’s almost a given that when employees feel better and understand how their efforts contribute to personal goals as well as company goals, they work harder. When they have proverbial “skin in the game,” they tend to want to succeed. It’s a win for the company as well as the individual employee.
7. Doesn’t Have to Be Expensive
Believe it or not, benefits don’t have to cost a business an arm and a leg. There are low or no-cost benefits that employees would love to have! It can be as simple as an employee discount for products and services, having lunch brought in occasionally, or building a flexible work environment where employees can work from home or job share. The point is to survey your employees to find out what’s important to them and be open-minded to the possibilities.
8. Blend Formal and Informal Benefits
Formal benefits are a definite plus - health care, savings plans, dental or vision packages, regular pay raises, extended vacation plans, and more will be an important part of your employee benefit plans. But where you may not be able to offer all of them, build in a benefits package that blends both those formal options with some more nontraditional options.
9. Be Yourself
Don’t forget the benefit of being a small business owner. The corporate world is not for everybody. There’s a tendency for employees in larger corporations to feel disconnected and lost in a maze of bureaucracy. The simple fact that you are what you are...a small business...is in itself a benefit. The business owners are there, accessible and approachable. Customer service doesn’t get bogged down in red tape and employees are closer, they know each other and tend to have a stronger sense of teamwork. Customers receive more personalized service and tend to be more loyal, which is more rewarding for employees.
As a small business owner, you may question whether or not you can afford to offer benefits. The question really should be, can you afford NOT to? While you may not be able to offer the same caliber of benefits as the big dogs can, you should focus on what you CAN do. Be flexible, be open to exploring options, and listen to what is important to your employees. Be willing to reinvent how you work with your employees. By focusing on your strengths, you will be able to effectively compete for quality candidates.